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Engelbert Stockhammer - 'Explaining the Euro Crisis: Current Account Imbalances, Credit Booms and Economic Policy in Different Economic Paradigms'

When Feb 08, 2017
from 06:00 PM to 07:30 PM
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Date: Wednesday 8 February 2017 
Time: 18:00 -19:30
Speaker: Engelbert Stockhammer
Talk Title: 'Explaining the Euro Crisis: Current Account Imbalances, Credit Booms and Economic Policy in Different Economic Paradigms’
LocationRamsden Room, St Catharine's College

St Catharine's Political Economy Seminar in the series on the Economics of Austerity, a seminar will be held on 08 February, 2017 - Engelbert Stockhammer will give a talk on ‘Explaining the Euro Crisis: Current Account Imbalances, Credit Booms and Economic Policy in Different Economic Paradigms'. The seminar will be held in the RAMSDEN Room at St Catharine's College from 6.00-7.30 pm. All are welcome. The seminar series is supported by the Cambridge Journal of Economics and the Economics and Policy Group at the Judge Business School.

Engelbert Stockhammer is Professor of Economics at Kingston University London and coordinator of the Political Economy Research Group (PERG).
He has worked on Post Keynesian Economics, financialisation, wage-led demand regimes and economic policy in Europe and is ranked among the top 5% of economists worldwide by REPEC. He has published numerous articles in international peer-refereed journals, including the Cambridge Journal of Economics, Oxford Review of Economic Policy,International Review of Applied Economics, Journal of Post Keynesian Economics, British Journal of Industrial Relations, Environment and Planning A, New Political Economy, and Socio-Economic Review. Recent books include Wage-Led Growth. An Equitable Strategy for Economic Recovery.

Talk overview:
The paper proposes a post-Keynesian analysis of the Eurozone crisis and contrasts interpretations inspired by New Keynesian, New Classical, and Marxist theories. The origin of the crisis is the emergence of a debt-driven and an export-driven growth model, which resulted in rapid increase in private debt ratios and current account imbalances. The reason the crisis escalated in southern Europe, but not in other parts of the world, lies in the unique dysfunctional economic policy regime of the Euro area. European fiscal rules and the Troika impose fiscal austerity on countries in crisis and the separation of fiscal and monetary spaces has made countries vulnerable to sovereign debt crises and forced them to comply. We analyse the role different paradigms attribute to current account imbalances, fiscal policy and monetary policy. Remarkably, opposing views on the relative importance of cost and demand developments in explaining current account imbalances can be found in both heterodox and orthodox economics. Regarding the assessment of fiscal and monetary policy there is a clearer polarisation, with heterodox analysis regarding austerity as unhelpful and large parts of orthodox economics endorsing it. We conclude that there is a weak mapping between post-Keynesian, New Classcial, New Keynesian and Marxist theories and different economic policy strategies for the Euro area, which we label Keynesian New Deal, European Orthodoxy, Moderate Reform and Progressive Exit respectively.

Please contact the seminar organisers Philip Arestis ( and Michael Kitson ( in the event of a query.